An Allstar Antitrust Case: False Advertising’s Effect on the Federal Trade Commission’s Operation

It’s not even safe to buy a snuggie anymore. Since the 19th century, American lawmakers have worked hard to facilitate a monopoly-proof market. Competition law like the Sherman Antitrust Act has given rise to a market structure that benefits consumers through required competition in the market. Unfortunately, as is true for most any institution, some individuals try to cut corners and undermine the integrity of the system. Recently, one such individual (or, in this case, firm) was brought to light.

The ABA Journal’s Debra Cassen Weiss (http://www.abajournal.com/news/article/snuggies_marketer_agrees_to_pay_8m_to_settle_allegations_of_deceptive_pract) reported that the Federal Trade Commission recently cracked down on a company that used TV infomercials to sell Snuggies in a deceptive manner. It’s a sad day when we cannot even trust the people selling us our Snuggies, but I digress.

Allstar Marketing Group is the company in trouble here, as they misled consumers in a variety of ways on their commercials. What this advertising firm did, however, is endemic of a larger problem. Instead of trying to compete with other groups in their market share, Allstar conspired to break the law through gaining a dishonest “leg up” on other firms and falsely advertising. We must commend the Federal Trade Commission for taking out Allstar in this instance, but it begs the following question: how many Allstar Marketing Groups haven’t been caught?

With cyber security becoming a national issue, it could be argued that the consumer is more at risk than s/he has ever been. Data breaches put American citizens, citizens just trying to participate in the market, in grave danger. In 2015, the government needs to work harder to convince the citizenry to have faith in a competitive market that has its best interests at heart. If it doesn’t, we cannot reasonably expect a spike in consumer investment over the long term. Distrusting consumers tend to save their money instead of putting it back into the market and any economic flow chart would conclude that this is bad for overall growth of the market.

Though I raise the question, I am unsure of its answer. One could advocate for more stringent competition laws as they pertain to the facilitation of a consumer-benefitting market, but the problem may not even be the lack of legality of putting consumers at risk. Rather, the issue could be one of enforcement (is the Federal Trade Commission doing enough?), but there are so many cases of consumers being misled (a quick internet search for examples of fraudulent advertising corroborates such) that one must wonder if the FTC even has the manpower or financial backing to crack down on the universal issue. When a consumer makes a purchasing mistake when provided an abundance of requisite, veritable information, that slip-up is his or her fault. The drawn conclusion, however, is different when the consumer is given a “bum steer” (the wrong information). Lemon laws (where consumers have access to remedy for purchases of products that fail to meet quality standards), it appears, are fortunately in effect for Snuggies, too. While the quality standards here are directly related to the “deal” of the purchase rather than the performance of the item, the ultimate legal interpretation is the same.

Allstar Marketing Group allegedly collected customers’ billing information “before asking how many products were being ordered, and without providing the total cost of the order,” per the FTC’s complaint (http://www.courthousenews.com/2015/03/05/ALLSTAR.pdf) via the ABA article. These unethical actions, combined with a litany of other dishonest business practices as outlined in the Weiss article, surely paint Allstar in a bad light. If you’re reading this piece, however, you are not naïve enough to believe that Allstar is the only one who has done something to this effect. Whatever the answer to this growing problem, the federal government has a responsibility to its citizens to get things sorted out.

#antitrust #antitrustlaw #FTC #FederalTradeCommission #competitionlaw #ShermanAntitrustAct #Allstar #AllstarMarketingGroup #falseadvertising #politics